Is it already too late to enter the CBD and cannabis market in 2021?

As an entrepreneur and consultant in the cannabis industry, this question often comes to my mind: Have we already missed the right time to enter the cannabis market with new companies? Is the CBD and medical cannabis market possibly already saturated? Today I wanna follow some economic thoughts about the development of the cannabis market from the beginning to the current state and wanna share some balanced evaluations to the main question of this article: Is it already too late to enter the CBD and Cannabis market in 2021 – And if not, from which directions is it recommended to dive into the market as an entrepreneur?

In professional and business circles with points of contact with cannabis, it is difficult to escape the competitive struggles and mergers of the world’s largest cannabis companies. The world’s largest stock companies have grown steeply for some time, more precisely until the end of 2018. But share prices have been tumbling since then. The 2018 legalization in Canada couldn’t catch up with high expectations from investors worldwide. The fourth largest cannabis company by sales, Tilray, has even been in a permanent decline since then – despite innovative ready-to-use medicinal products for pharmacies and patients. It seems like a smart move, that Tilray announced some days ago to merge with Aphria – together they form the biggest cannabis company of the world measured by revenue.

tilray stock market development
tilray stock market development

Even broad diversified companies such as Canopy Growth, which are active in all imaginable market segments, were unable to match the highs of 2018. To illustrate how broadly Canopy Growth is positioned, and how little this broad positioning has pushed the share price, I listed a few of their companies with a brief description:

  • Tweed: THC-containing cannabis flowers and soft drinks and vape carts
  • Martha Stewart: THC gummies and softgels
  • BioSteel: Nutritional supplements and beverages for athletes
  • Houseplant: “Premium” cannabis flowers and pre-rolled joints
  • Tokyo Smoke: Specialty cannabis stores in Canada
  • DNA Genetics: A seed bank
  • plus many more CBD and THC brands in all kinds of variations
canopy growth stock market development
canopy growth stock market development

One factor really stands out in my two initial examples: They are both Canadian companies! And it’s not only them, 8 of the world’s nine largest cannabis companies are based in Canada – the first G7 nation, that approved cannabis for medical and recreational use in 2018. Canadas step also includes legal money processing through the official banks, which is still not possible in the USA – a big push for Canadian cannabis companies.

biggest cannabis companies worldwide by revenue and market cap
biggest cannabis companies worldwide by revenue and market cap

But the world with more than 7.7 billion people does not only consist of Canada, a country of 37.59 million people. Canada, the second largest country in the world in terms of area, is inhabited by just under 0.4% of all people on earth. But, as a G7 country, Canada has a huge gross domestic product (GDP in relation to its population).

  • GDP Canada 2020:     1,64 Trillion US-Dollar.
  • GDP worldwide 2020: 83,8 Trillion US-Dollar.

Canada generates around 2% of global GDP with 0.4% of the world’s population: These figures speak for a strong economic power. To open up opportunities for new cannabis markets, we could of course now simply look at which countries have high GDPs. But just because a country has a strong overall economic output does not mean that a cannabis market can also establish itself locally. The base condition for establishing new cannabis markets is of course first of all local legislation, but also international framework agreements. But:

Purchasing power as an indicator of growth and target markets for the cannabis industry

In my opinion, however, to assess new CBD markets it’s way more important to look at a country’s purchasing power instead of just the current legal status. Because cannabis legislation can change much faster than the economic upswing of a country, when we take a look on the development of both economy and legalization events over the last few years. One big step for example was the reclassification of Cannabis by the UN in the end of 2020, when the therapeutic use of Cannabis got finally recognized.

So we can expect a general growth of the cannabis industry for the future, as it’s likely that more and more countries will legalize the use of CBD or medical cannabis use over the next decades. And when this all happens, we really should be prepared and have a basic understanding of which countries have the best starting positions for a successful cannabis industry. Of course I cannot say this guaranteed, but I set up the brave thesis that countries with bigger purchasing power are more likely to become attractive markets for cannabis products.

I write from Germany and Switzerland and took a look at the purchasing power of different countries in relation to Germany. I sourced the data from Lä This page explains very well for all interested readers, what purchasing power actually is:


Cost of living and purchasing power in relation to income

We have set the cost of living in Germany from 2019 and 2020 as a basis with an index of 100 and then adjusted the other countries relative to Germany. With an index of 80, the usual costs of daily needs are 20% lower than in Germany.

The monthly income (please do not confuse it with a wage or salary) is calculated from the gross national income per inhabitant.

The calculated purchasing power index is again based on a value of 100 for Germany. If it is higher, you can afford more based on the cost of living in relation to income. If it is lower, the population is also less prosperous.

Using the example of Switzerland in relation to Germany:

With a cost of living index of 153, all goods are on average around 53 percent more expensive than in Germany. However, at 6364 euros, the income in Switzerland is also 76 percent higher than in Germany, which means that the average citizen can again afford more. If you now calculate the 53% higher costs against the 76% higher income, a Swiss can still afford about 15 percent more than a German. So the purchasing power of Switzerland is 15% higher than the purchasing power of Germany.

purchasing power index and cost of living index of countries better than Germany CBD Cannabis purchasing power
purchasing power index and cost of living index of countries with higher purchasing power than Germany (🇩🇪 = 100).

We see, that Canada is in 21st place. Canada has a purchasing power index of 112.6% in relation to Germany, so Canadians can afford more products of the “good life” after deducting all fixed costs. By products of “good life” I mean, for example, expensive cosmetic and lifestyle products, such as CBD oils or cannabis flowers. Both are quite elaborately produced products with a long value chain and therefore automatically more expensive than staple food or toilet paper. In addition, cannabis products have not yet been classified as essential for survival, which is why cannabis products have to be paid for with money that is left in the consumer’s wallet after all basic needs have been met.

Industrial nations as strong target markets for cannabis products

What is striking when looking at the purchasing power ranking: Many of the countries shown with higher purchasing power than Germany are among the economically strong industrial nations. We see many European countries, the USA, Japan and Australia: All of these countries have dominated the economic markets of our world for the past 70 years. In developing countries such as China and India, on the other hand, there is currently rapid economic growth, but purchasing power remains far behind at 71% and 35% compared to Germany. This means that the residents of these countries tend to have less money left over for the regular consumption of CBD and cannabis products – even if the cannabis products were allowed in these 1.5 Billion citizens countries.

But let’s take a look at the countries with higher purchasing power: In countries such as the USA and Israel, the business with medical cannabis and CBD is already booming, and there, like in Switzerland, the market is more likely to be saturated at the moment. In general, entering the market seems unattractive. But countries like Switzerland show that new markets are constantly forming and opening up around the world. “Little” Switzerland with only 8 million inhabitants has developed into the most important CBD producer in Europe within four years and now supplies almost all European CBD markets with high quality CBD flowers and oils: Despite the higher permitted concentration of active ingredients and dizzyingly high levels of minimum wages!

And there are not only chances in expanding existing markets with exports, but also a still increasing demand for cannabis products in already existing markets.

Lately I read about the 36.6 % stakes of Constellation Brands in Canopy Growth. Constellation Brands also owns the beer brand “Corona”. Now as international respected Institutions like the United Nations recognize the medical benefits of cannabis, and companies like Canopy Growth want to distribute THC beer, that makes similar effects to a bottle of normal beer, it’s likely that over the time the market share of cannabis beer in relation to alcohol sales will increase. Fingers crossed, but it’s known that many people worldwide drink beer instead of cannabis, because with drinking beer they cannot loose their drivers license that easy or get into other kinds of legal trouble. But that doesn’t mean, that they wouldn’t switch to an alternative, that has less longterm side effects and gets more and more legal around the globe. I think it will be special products like cannabis beverages or cosmetics, that will be accepted from the mass of the potential consumers. According to Wikipedia, 1 Billion people worldwide smoke and 2 Billion people drink alcohol – so it’s more common to drink than to smoke. But back to our established cannabis markets, that expand their markets by exporting their goods and knowledge regarding  smokeable and vapeable cannabis flowers.

The Canadian cannabis companies already have large market shares worldwide

Meanwhile, other European countries with a higher purchasing power than Germany were targeted at an early stage by the stumbling Canadian companies; investments in Denmark, for example, were placed by the fifth largest cannabis company in the world – Aurora from Canada. While Aurora’s share price stumbled due to the oversaturation of the Canadian medical cannabis market and exports to medical cannabis markets abroad developed slower than expected, many experiments were initiated straight on locations abroad. In Denmark, for example, a “Sky Class” greenhouse of almost 10,000m2 was built to supply the Central European medical cannabis market. Aurora’s strategy of gaining an early mover advantage in countries with emerging markets for medical cannabis was particularly pushed in Europe. Aurora acquired medical cannabis production companies in Portugal and founded medical cannabis distribution companies in Poland, Germany, Great Britain and Italy, among others.

In Italy, the second largest medical cannabis market in Europe emerges

In Europe, the medical cannabis market is growing these days. Investor groups and Entrepreneurs from the pharmaceutical industry compete with established medical cannabis companies such as Aurora or Aphria for the few slots for growing and selling medical cannabis. The established companies are often awarded the contracts, because they can best convince the European authorities that they can comply with European GMP and GACP requirements with established concepts. European start-ups usually do not have the opportunity to present their best practices and existing greenhouses (like I visited in 2018 in California, here’s the photo story), because most of them simply don’t have established these structures for now.

In addition, foreign production companies are pushing prices for medical cannabis down enormously: According to marketrealist, Aurora has guaranteed a sales price of € 1.73 per gram for the guaranteed delivery quantity of at least 400kg per year for the Italian market. These prices are only possible when running huge, sophisticated and process optimized cannabis production facilities. To do this, land prices, rents, labor costs and electricity tariffs at the place of cultivation must be very low and subsidies high – a advantage for companies like Aurora, which do not always grow medical cannabis in the target markets but import it from other countries. Local farmers and nurseries cannot keep up with such prices in initial stages. Added to this, in the medical sector only CBD and THC active ingredient contents has to be constant by law and, for example, terpene values ​​don’t have to be constant yet: This means that medical cannabis can be produced at even lower prices and still fully meets the official requirements for quality – even if the patient at the end of the value chain sees it very different, because the medical cannabis don’t catch up with their expectations of a high quality medical product.

Germany currently has allowed three medical cannabis producers to produce in Germany

Market observations of medical cannabis worldwide suggests, that this market is tightly controlled by the major Canadian companies at the moment. The demand for medical cannabis is also still starting to increase and at the moment the demand is still not that big. So in the medical sector there’s no space for many competing production companies at the moment.

In Germany, for example, three medical cannabis production companies have so far won the sought-after medical cannabis production contracts: two of them Aphria and Aurora. The third company for the production of medical cannabis is Demecan, which for once comes from Germany. The only downer: Demecan is only allowed, to produce and sell about half as much medical cannabis per year from the German BfArM as its two competitors from Canada are allowed each.

And even if it sounds unfair, that out of over 180 applicants, just three got a contract, it matches the current market realities. According to, Germany imported only 9,249kg of medical cannabis in 2020. In comparison to 2018-2019, the growth rate for the demand of medical cannabis even decreased by 63% in the 2019-2020 period.

prohibition partners growth of German medical cannabis market

The focus should be on the patient and consumer – market niche high quality medical cannabis?

However, for entrepreneurs and investors there is some light at the end of the tunnel: The feedback from German cannabis patients shows that the quality of medical cannabis does not yet meet their expectations. This opens opportunities for new medical cannabis producers. Let’s check out, why there are some niches opening. First of all, let’s hear the patients. The Vice writes in this article:

Germany’s handling of medical cannabis is above all confusing, say those affected. Medical Cannabis is difficult to obtain and talks with doctors are still burdened with prejudice. The quantities available in Germany are too small, doctors lack expertise and health insurance companies regularly refuse to pay. Those who have to pay for their medical cannabis say it’s overpriced and of poor quality. Quite a few therefore continue to try the black market or cultivate their needed medicine illegally themselves.

It is frightening to read that some patients value the unregulated quality of the black market more than the strictly state-controlled medical cannabis from the pharmacy. It becomes clear that the focus on requirements for medical cannabis products vary widely from producers, governmental agencies, wholesalers, pharmacies and patients.

  • The production companies want to manufacture at the lowest possible cost.
  • The authorities want compliance with all required limits of pesticides ​​and consistent active ingredient concentrations of THC and CBD.
  • The wholesalers want to deliver as many varieties as possible to as many pharmacies as possible.
  • The pharmacies want the most stable range possible on their shelves.
  • And most important: The patient wants a delicious, terpene-rich, consistent product – preferably even different varieties with different terpenes for morning and evening applications.

Cheapest production processes for the established producers of medical cannabis

Companies like Tilray communicate their production process transparently to the outside world. It is noticeable that the Canadians only allow four to eight days of drying time for their medicinal cannabis flowers of the highest quality. Cannaisseurs know, however: 10-14 days of air drying and subsequent hand trimming lead to really tasty cannabis flowers. We don’t even want to start with a two to three month curing process – hardly any producer of medical cannabis spends resources on a decent curing process.

tilray drying and curing process under 8 days.png
Tilray production process durations

In addition, after harvesting and drying, cannabis flowers are often radioactively irradiated with gamma radiation in order to then guarantee to pass all limit value tests for fungi, mold, insects and pathogens. They have implemented processes that make the production of large quantities of medicinal cannabis flowers especially cheap.

All these observations show that although the required quantities of medicinal cannabis flowers can be already covered by overproduction in certain countries through exports worldwide, the quality is still well below the expectations of patients. In the medical cannabis market, there is still room for new companies, especially in the high-quality market niche.

Market niches as a great opportunity for the cannabis market – let’s have a look on CBD

Because the CBD market is (still) significantly less regulated than the market for medical cannabis, the discrepancies in the expectations for the quality of CBD products between consumers, producers and wholesalers are, in my opinion, smaller than on the market for medical cannabis. This means that the producers are more likely to place those qualities on the market that are ultimately well acknowledged by consumers. But even in the CBD market, many companies are subject to subjective assessments and are currently still producing for past demand and requirements.

In Switzerland, for example, there is a certain overproduction in lower and middle grades, but very high quality CBD flowers are offered by too few companies. The market for CBD biomass (low, cheap quality) is hardly worthwhile in countries like Switzerland due to the costs of rent, energy and work, when countries like China offer CBD biomass for EUR 3.50 per kilogram. Cosmetics manufacturers who are interested in the pure CBD raw material, of course, prefer to buy the basic substances for their products abroad because of the cost savings. The end consumer, on the other hand, prefers to buy a high end quality plant product, that has been lovingly dried, is based on good genetics and brings the expected effect when smoked. As a small but fine craft cannabis brand, you can definitely establish yourself almost anywhere – you should just keep your expectations of the company’s scaling low. Just to give my end consumer assumptions some credibility: I can evaluate the end consumers perspective in such a specific way, because I worked in a Swiss retail store for CBD over the last year from time to time.

Economy of scale vs. market niches

A friend of mine who advises medical cannabis companies in Great Britain once told me a funny anecdote: A customer calculated how much acreage he would need for so and so many millions of profit a year. With his thinking, he would have produced ten times the needs of medicinal cannabis in the UK per year. You can safely imagine what the consultants first piece of advice was.

Anyone who observes the CBD industry will notice one thing: There are hundreds of brands and thousands of products and every company that can assert itself in the market in the long term will sooner or later find its own market niche. Some CBD brands can make a living from working with just one big influencer. Other CBD brands rely on a mix of influencers – without having to activate a single marketing tool. I’ll give you an impression on how several German CBD Brands found their really own powerful market niches.

Great realized niches from German CBD brands

The German cosmetics startup J’tanicals from Dusseldorf, for example, successfully placed its three CBD cosmetic products at Europe’s largest perfumery retail chain Douglas. Apparently the brand is really serious about its niches, because J’tanicals has also been able to position itself successfully at Aboutyou, Germany’s fourth largest online shop for fashion.

J'Tanicals CBD cosmetics line branding
J’Tanicals CBD cosmetics line

Also the consortium around MyWeedo and Hempgroup has found exciting niches: Together with the Süddeutsche Zeitung, which counts over 100 million! unique visits each month, they have published a guide to CBD on the Süddeutsche’s website, where their CBD oil is prominently advertised. It should be mentioned at this point that the Süddeutsche Zeitung not only has a high number of visitors, but is also regarded as the leading news and publishing medium in Germany that is perceived very seriously. So the Süddeutsche creates trust, which I find very important for a product as new as CBD. Well played, MyWeedo and Hempgroup.

CBD Guide von MyWeedo auf der Seite der Süddeutschen Zeitung, wo auch das zum Unternehmenskonstrukt dazugehörende Hempcrew CBD-Öl beworben wird.
CBD Guide von MyWeedo auf der Seite der Süddeutschen Zeitung, wo auch das zum Unternehmenskonstrukt dazugehörende Hempcrew CBD-Öl beworben wird.

Tom Hemp’s from Berlin, on the other hand, was one of the first CBD companies to launch a pop-up store – in the much-visited East Side Gallery in Berlin, a shopping gallery. In addition, Tom Hemp’s has placed his CBD products at Europe’s ninth largest online shop, Zalando – Congratulations!

Even more classic distribution models can be successfully occupied as niches. Nutree, for example, has placed its CBD oil at Rossmann – one of the largest drugstore chains in Europe. And that’s just one of many retail chains. As CBD becomes more popular in society, other retail chains will also want to sell CBD products. Just imagine when CBD oils are available in most grocery stores like Lidl, REWE, Kaufland or EDEKA in Germany. Same goes for Wal-Mart, Tesco and other international retail companies.

And now comes the punch line: Aurora and other Canadian public companies have no participation in all of these promising cannabis product placements in powerful market niches.

market niches ≠ Aurora and sons

So you can see very well that there are still numerous options on how to successfully produce and sell CBD and cannabis products without having to fear the stock giants from Canada. While these companies have quickly ripped off the mass market, they are still a long way from the holy grail of quality. These Companies would also need thousands of sales employees to open up to all the possible sales channels – most important for the less regulated CBD market. Just think of “Bunte Blume”, a CBD startup that sells its products through the Berlin “Späti” network – small, independent shops that sell drinks, cigarettes and snacks around the clock in the smallest of stores. And since 2020 also CBD flowers! And “Bunte Blüte” holds a large stake on this attractive market niche.

Countries as market niches that offer cannabis business opportunities

But a lot can still be achieved in the cannabis market not only in a vertical orientation, there are also still many possibilities in the horizontal direction. The CBD trend has only just nudged the world markets and billions of people still have no access to a regulated market for cannabis and CBD.

Countries that are dependent on particularly good economic ideas due to their location factors such as size, climatic zone, relief and lack of fossil resources, are able to influence their entire surrounding regions or even entire continents in the near future influence, like Switzerland influenced Europe – although Switzerland is not even a member of the EU! But it’s one of the most central located countries in Europe.

Similar to Switzerland, other states with a special status could develop in their regions. These countries include, economy-wise, for example Qatar, Singapore or Japan. Or in Europe Luxembourg – the country is one of the first countries to legalize THC-containing cannabis for recreational purposes in Europe.

So it is definitely worth taking a closer look over the next 10 years to see where international markets are opening up and how you can best establish entrepreneurial roots in these markets. But one is for sure: The Cannabis market is still growing long term and if you didn’t start you cannabis company till now, today is the best time to get in.

As a last note, please don’t hesitate to reach out to with all your questions, as we have a bunch of qualified consultants for several cannabis related questions and ideas. May it be marketing, production or compliance related – we’re here for you to help you getting your company started in a structured, data based way.


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